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MODERNIZATION OF AGRICULTURE
AND ECONOMIC DEVELOPMENT
The Indian Experience
Baku/ H. Dholakia and Ravendra H. Dholakia
(Indian Institute of Management,
Ahmedabad, India)
Introduction
The world has witnessed spectacular increases in agricultural output during the
twentieth century, particularly in its latter
half. This achievement is mainly ascribed to
the improved agricultural practices leading
to higher productivity of land and labour.
The contribution of extensive cultivation
has not been significant of late. Bringing
more land area under agriculture is becoming more and more difficult in most countries. Since prosperous agriculture is considered to be the most crucial base for
economic development particularly in the
less developed countries (LDCs), the only
viable option for them is to continue to
enhance the productivity of land and labour
in agriculture. Increased productivity in
agriculture has been achieved in several
parts of the world mainly by modernizing
agriculture. Modernization consists largely
of using improved seeds, modern farm
machinery such as tractors, harvesters, threshers, etc., chemical fertilizers and pesticides
in an optimal combination with water. The
present study proposes to examine the role
of modernization of agriculture in the overall economic development of the LDCs. It
addresses itself to the following specific
questions:
(a)
What is the role of agriculture in
the economic growth of LDCs?
(b)
What is the impact of moderniza
tion of agriculture on the produc
tivity growth?
(c)
What role can the governments in
LDCs play to promote moderniza
tion of agriculture?
In the next section, we examine the first of
the above-mentioned questions with the
help of data for the period of 1965-87 on
selected 43 developing countries. Since the
next two questions require detailed investigation with a lot more statistical evidence to
support the arguments, an indepth study of
the Indian experience focussing on aspects
is presented. The third section deals with
the process of modernization of Indian agriculture in terms of a few acknowledged
indicators like use of improved seeds, fertilizers, etc. In the fourth section, detailed
estimation of the contribution of factor
inputs vis-a-vis total factor productivity
growth in the Indian agriculture is attempted
for different sub-periods carefully selected
to delineate various phases of modernization of agriculture. The fifth section is,
then, devoted to the discussion of the role of
government in promoting modernization in
Indian agriculture. Some lessons for the
modernization of agriculture in LDCs from
the Indian experience are drawn in the concluding section.
Role of Agriculture in
Economic Growth of LDCs
Agriculture is a predominant activity in
most developing countries. As economic
growth and development take place, importance of agriculture tends to decline according to the famous hypothesis. The declining
share of agriculture is, however, a slow
phenomenon and is felt only over a relatively long time horizon. The implication is
that growth of total income exceeds that of
agricultural income over a long time.
In an international cross-sectional perspective, the role of agriculture in economic
growth is generally examined by considering the extent to which agricultural growth
explains variations in the growth of total
income among different countries. The
growth of total income in a country is
basically an average of the growth of income originating in agriculture, industry
and service sectors. In order to estimate the
relative importance of these three broad
sectors in explaining the variations in the
growth of total income, the following multiple
regression is run:
G Y = a o +a,G A +^G,+a.,0,+U .... (1)
where G represents annual trend rate of
growth; subscripts Y, A, I and S represent
total GDP, GDP in agriculture, GDP in
industry and GDP in services, respectively;
U is a randon error term and a's are the
parameters to be estimated.
»
Equation (1) is estimated by using the cross
section data on the trend rates of growth of
GDP by sectors, available from the World
Development Report 1989 for the selected
developing countries (see Appendix 1). The
regression is run for two time periods: (a)
1965-80 and (b) 1980-87. The choice of the
year 1980 is again dictated by the ready
availability of data on trend rates of growth
by sectors. The results of the two regressions are:
(a)
For the period 1965-80:
GT = -0.3787 + 0.5064GA +
0.2187G,+0.4160GS
t-values:
(-1.869)(9.889)
(8.973)(9.192) R-square =
0.9597; R-bar-square =
0.9566 F-statistic (3,39) =
309.597
(b)
For the period 1980-87:
GY = 0.2456+0.1677GA
\i—u inm
+0.4687G,+0.2243GS
t-values:
(1.085)(2.401)
(10.136X3.365) R-square =
0.9070 R-bar-square = 0.8999
F-statistic (3,39)= 126.834.
The results of this exercise are quite interesting. Both the equations are statistically
highly significant. They clearly show the
importance of the growth of agricultural
income in determining the variations in the
growth of total GDP in developing countries. The growth of incomes in all the three
broad sectors are individually significant in
both the periods in explaining the growth
variation across countries. Agriculture,
however, is the most dominating sector
during the period 1965-80, whereas it is the
industrial sector which dominates the scene
during the eighties. The results of the two
regression equations imply that the contribution of the growth of agricultural income
to the growth of total income on the margin
has fallen considerably from 44.4% during
1965-80 to 19.5% during 1980-87 (2). As
against this, the marginal contribution of
the growth of industrial income has gone up
from 19.2% during 1965-80 to 54.5% during
1980-87. These trends, however, have to be
interpreted in the context of the overall
growth trends over the two sub-periods.
Table I presents the summary trends in the
overall and sectoral growth rates in the
selected 43 LDCs.
It can be readily seen from Table I that out
of 43 countries considered here, 35 countries experienced a decline in their trend
rates of growth over the two sub-periods.
Out of these 35 countries, 10 countries
experienced increase in the growth of agricultural incomes, whereas only 5 and 2
countries experienced increased growth of
income in industry and services, respectively. Thus, in the overall context of the
retardation of the growth of GDP in the
LDCs, industry and services seem to have
contributed much more than agriculture.
This is reflected in the declining marginal
contribution of agriculture and increasing
contribution of industry in our regressions.
Some Aspects of Modernization of
Indian Agriculture
Since the inception of National Economic
Planning in India in 1951, sustained efforts
have been made by the planners to accelerate the pace of agricultural development in
the economy. However, the main emphasis
during the early stages of planning was on
broadening the industrial base through rapid
development of basic and capital goods
industries. It was only in mid-Sixties, when
the economy suffered a major setback due to
two consecutive years of drought, that a
shift in the development strategy focussing
on rapid agricultural development became
necessary. In fact, the impact of two consecutive drought years (1965-66 amd 196667) was so severe that it almost nullified the
effect of more than a decade of agricultural
development and in its aftermath brought
about a severe industrial recession. As a
result, planners were forced to have a 'plan
holiday' for a period of three years from
1966 to 1969. It was during this period that
a new strategy of agricultural development
focusing on modernization of agriculture
and improvement in farm productivity was
launched. This strategy for modernization
of agriculture, widely referred to as the
'Green Revolution', has been pursued vigorously in Indian economy since 1967. The
term 'Green Revolution' indicates a package
for modernization of agriculture consisting
of "large scale application of modern science and technology to agriculture'' involving "extensive and intensive use of improved production technology and high
yielding varieties of seeds" (CSSC, 1974).
Stated briefly, the main components of the
Green Revolution technology are the introduction of high yielding varieties of seeds
for several major crops, creation and utilization of energized well irrigation and lift
irrigation facilities, use of high doses of
fertilizers and pesticides, and extensive use
of farm machinery directed at improving
farm productivity.
To examine some aspects of modernization
of Indian agriculture, it would be useful to
divide the post-Independence period into
two sub-periods: (a) the period of planned
economic development preceding Green
Revolution (1950-51 to 1966-67); and (b)
the period of Green Revolution from 196667 to 1988-89, the latest year for which the
relevant data are available. Moreover, since
there has been a significant acceleration in
the overall rate of economic growth in
Indian economy during the Eighties, we
may further divide the period of Green
Revolution into two sub-periods: 1966-67
to 1980-81 and 1980-81 to 1988-89. The
basic data on the relevant aspects on Indian
agriculture relating to the four benchmark
years, viz., 1950-51,1966-67,1980-81 and
1988-89, are presented in Appendix 2, while
some indicators of extent of modernization
in Indian agriculture derived from these
data are presented in Table 2.
It is evident from the information given in
Appendix 2 that the period of Green Revolution was marked by spectacular increases
in the area under high yielding varieties
(HYV), extent of fertilizer use and extent of
irrigation. Thus, during the period 1966-67
and 1988-89, the area under HYV increased
from less than two million ha. to more than
62 million ha., the extent of fertilizer use
increased from around one million tonnes to
11 million tonnes, theextent of irrigation increased from less than 27 million ha. to
around 60 million ha., the number of tractors increased from 54 thousand to 1,205
thousand and the extent of double cropping
increased from 15% to 25% of net area
sown. By 1988-89, more than one-third of
the gross cropped area was covered by
irrigation and use of HYV, while the average dose of fertilizer had increases from less
than 7 kg. per ha. in 1966-67 to more than
62 kg. per ha. Such large scale modernization of agriculture led to significant improvements in the productivity of land as
well as labour. Land productivity, which
had increased at an average rate of only
0.8% per annum during the pre-Green Revolution period, increased at an average rate of
2.5% per annum during the subsequent
period. Similarly, labour productivity, which
had been more or less stagnant till 1966-67,
increased at an average rate of 1.12% per
annum during 1966-67 to 1988-89. The
period of Green Revolution was also marked
by a significant increase in capital investment in agriculture, with the capital investment per ha. increasing at an average rate of
1OOO
2.9% per annum during 1966-67 to 198889, as compared to the average growth rate
of 1.7% observed during the earlier period.
Impact of Modernization
on Productivity Growth
On the basis of an analysis of various
indicators presented above, we can identify
three distinct phases of development of
Indian agriculture. Phase I consists of the
period from 1950-51 to 1966-67, which was
marked by a significant increase in the net
area brought under cultivation through a
sustained process of land reclamation and
land improvements. This period was marked
by only marginal improvements in labour
and land productivity and a decline in capital productivity. By the end of the Sixties,
most of the existing potential for expansion
of net area available for cultivation was
already tapped and it was evident that the
future growth of agriculture would have to
depend more and more on non-land resources. The period from 1966-67 to 198081 represents Phase II of agricultural development, which was marked by widespread
modernization of agriculture coupled with a
significant increase in capital investment. In
fact, during this period the gross capital
formation as a proportion of gross domestic
product in agriculture increased sharply to
more than 9% from the average level of
around 6% observed during the pre-Green
Revolution period. The period after 198081 represents Phase III, which is marked by
simultaneous and significant improvements
in the productivity of land, labour and
capital. During the Eighties, the average
annual growth rate of land productivity has
been 3.1%, of labour productivity 1.9%
and capital productivity around 1%. During
this period there has been a significant improvement in the utilization of the basic
infrastructure and growth potential created
during the earlier phase of modernization.
Thus, for instance, it has been observed in
the latest issue of Economic Survey (Government of India, March 1990) that, in the
years 1986-87 and 1987-88, the achievement in the utilization of irrigation potential
was more than the targetted level of utilization.
Having examined the impact of modernization of agriculture on partial factor productivity, we may now examine its impact on
total factor productivity. The growth of
partial factor productivity (such as labour
productivity or land productivity) indicates
the combined effect of changes in factors of
production and technical progress. To estimate the pure effect of technological change,
it is necessary to eliminate the effect of
changes in factors by constructing total
factor input (TFI) as a weighted average of
the three factors inputs, viz., land, labour
and capital. The total factor productivity
(TFP), which is generally used as a broad
indicator of the extent of technical progress, is then derived as the difference between the NDP in agriculture and the TFI.
Our estimates of the growth rates of total
factor input and total factor productivity in
Indian agriculture are presented in Table 3,
while the estimated break-up of the overall
growth rate of agriculture in terms of the
specific contributions made by various
sources is given in Table 4. It is evident
from Table 3 that there has been a marginal
decline in the growth rate of labour input
and a significant decline in the growth rate
of land input during the period 1966-67 to
1988-89. However, the growth of capital
input shows a marked acceleration during
the sub-period 1966-80 followed by a deceleration during the Eighties. Recent studies
by Patnaik (1987), Rath (1989) and Shetty
(1990) have analyzed this phenomenon of
deceleration in the growth of ag-ricultural
investment during the Eighties. The main
conclusion emerging from these studies is
that private investment in agriculture is
affected by public sector investment in
agriculture and the growth of the latter has
declined steadily during the Eighties.
The observed trends in the growth of individual factor inputs have resulted in a decline in growth of the aggregate supply of
factor inputs to agriculture especially during the Eighties. The average growth rate of
total factor input has declined from 1.55%
during the pre-1966-67 period to 1.47%
during the subsequent period and further to
1.20% in the period after 1980-81. As
against this, the growth of NDP in agriculture has accelerated significantly during the
post-Green Revolution period as compared
to the earlier period. The average growth
rate of net agricultural output (NDP) increased sharply from 1.72% during pre1967 period to 2.36% during the subsequent period and further to 3.27% during
the Eighties. This phenomenon of a significant acceleration in the growth of agricultural production during the Eighties has
been analyzed in a recent study of Mahendradev (1987) based on detailed state level
data on the growth of food grains production. The general conclusion emerging from
Mahendradev's study is that the Eighties
have witnessed a significant increase in the
growth of food grains production in many
states including the hitherto low growth
states such as Rajasthan, Madhaya Pradesh
and West Bengal, and that this acceleration
in the growth of production could be attributed to the spread of bio-chemical technology to these states during the first half of the
Eighties. It may be mentioned here that this
study covers the period up to 1984-85 and
there has been a significant increase in the
level of food grains production in almost all
the states during the subsequent period
(1984-85 to 1988-89).
Mahendradev's study has also examined the
relationship between growth and instability
of agriculture and its conclusion is that
during the last two decades the degree of
instability has declined significantly in both
high growth states as well as low growth
states, which indicates a negative rather
than a positive relationship between growth
rates and the degree of instability. Thus, the
Indian experience of agricultural growth
does not support the hypothesis of high rates
of growth causing high instability. In fact,
the ability of agriculture to withstand the
adverse effects of successive run of poor
monsoons for three years culminating in the
severe drought of 1987-88, without experiencing any major reduction in food grains
production, clearly indicates that the Indian
agriculture had acquired a remarkable degree of resilience during the Eighties. This
has been achieved partly by the spread of
modern technology and partly on account of
the protective benefits of irrigation. A recent study by Dhawan (1987) shows that the
output elasticity with respect to rainfall
declines from 1.6 in low rainfall states and
1.0 in medium rainfall states without irrigation to the levels of 0.2 and 0.5, respectively, with irrigation. Thus, the acceleration in the growth of agricultural production
brought about by the Green Revolution has
actually reduced the degree of instability experienced by Indian agriculture and thereby
made it less dependent on the weather
conditions.
Given the significant acceleration in the
growth of net agricultural output and the
simultaneous deceleration in the growth of
total factor input, it is hardly surprising to
observe that the post-Green Revolution period witnessed a phenomenal increase in the
growth of total factor productivity in the
agricultural sector. It is interesting to note
that during the pre-Green Revolution period
TFP was almost stagnant, its average
growth rate being only 0.17%. As against
this, the average annual growth rate of TFP
increased to about 0.9% during the period
1966-67 to 1980-81, and it went up to
2.05% during the period 1980-81 to 198889. Thus, the modernization of Indian agriculture during the period of Green Revolution has succeeded in bringing about major
technological transformation as indicated
by the high and rising growth rate of TFP in
the agricultural sector.
The contribution made by growth of TFP to
the overall growth of Indian agriculture can
be seen from the analysis of sources of
growth presented in Table 4. During the
pre-1967 period, more than 90% of the
growth of agricultural NDP was contributed by the growth of total factor input,
while the growth of TFP accounted for less
than 10%. This position has changed dra-
matically during the period 1966-67 to
1988-89 with growth of TFI accounting for
51% and growth of TFP accounting for
49% of the growth of net agricultural output. In fact, during the Eighties, growth of
TFP has accounted for 63 % of the growth of
net output, and, as a result, despite a decline
in the growth of TFI, the overall growth of
agricultural NDP has shown a significant
increase.
It is interesting to examine the impact of accelerated growth of TFP in the agricultural
sector on the growth of the economy in
general and agricultural sector in particular.
According to our estimates, if the growth of
TFP in agriculture had occurred at the same
rate during the post-1967 period as in the
pre-1967 period, the level of real NDP in
agriculture in the year 1988-89 would have
been lower by about 122.3 billion rupees,
which indicates adecline of 21.9% over the
level actually achieved. The direct impact of
the lower level of agricultural NDP on the
overall NDP would have been to reduce its
level in 1988-89 by 9.3%. This would have
resulted in a decline in the growth rate of the
economy as a whole from the observed level
of 4.3% per annum to 3.9% per annum
during the period 1966-67 to 1988-89. More
specifically, the significant acceleration in
the overall economic growth experienced
by the Indian economy during the Eighties
would have been considerably reduced if the
total factor productivity in agriculture had
not shown a remarkable acceleration during
this period. If the growth of TFP in agriculture during the period 1980-81 to 1988-89
would have been at the same rate as during
the pre-1967 period, the overall growth rate
of the economy during this period would
have declined from the observed level of
5.5% per annum to 4.9% per annum. Thus,
the acceleration in the TFP growth in agriculture has made a significant contribution
to the acceleration in the overall growth of
the economy during the Eighties.
Role of Government in
Modernization of Agriculture
Government intervention for the development of the agricultural sector is a common
feature in most LDCs. In India, the government has played a major role in promoting
agricultural development in general and its
modernization in particular. Of the various
aspects of government intervention in Indian agriculture, the following two aspects
deserve special mention: (a) direct intervention in the market mechanism through price
support/procurement policy; and (b) subsidization of major agricultural inputs.
The Indian government follows administered price policy in respect of several agricultural commodities by fixing their procurement/support prices. The government
announces the procurement or minimum
support price for each season for each crop
and also arranges for the corresponding procurement or price support operations through
public, cooperative and other statedesignated agencies. In fixing the agricultural prices, various factors such as the cost
of agricultural inputs, trends in market
prices, inter-crop price parity, etc. are taken
into account. It is now well recognized that
the government's price policy has played a
crucial role in protecting the farmers from
market uncertainties and it has also been
instrumental in encouraging the adoption of
high yielding varieties which has contributed to the speeding up of the process of
modernization.
Information on the trends in the minimum
support/procurement prices of selected agricultural commodities in India is provided
in Table 5. It is evident that the minimum
support prices announced by the government for various agricultural commodities
have increased significantly during the period
1980-81 to 1988-89. It is interesting to
observe that the government intervention in
the form of administered prices has not
been at the cost of economic efficiency. In
a recent study, Gulati (1989) has shown that
investment programmes aimed at increasing the production of wheat, rice and cotton
had high economic rates of return during
the Eighties.
The strategy of modernizing agriculture is
likely to succeed only to the extent to which
the individual farmers actually use modern
agricultural inputs. In India the government, therefore, adopted the policy of
providing a wide range of incentives to the
farmers in the form of specific subsidies on
modern agricultural inputs. Thus, the subsidies have been provided to the farmers to
encourage the use of chemical fertilizers,
irrigation facilities, electricity and also to
avail credit facilities. Ashok Gulati (1989a)
has estimated the magnitude of different
types of subsidies enjoyed by the farmers
during the period of the Eighties. Table 6
brings out the trends in input subsidies in
Indian agriculture. It can be seen from this
table that each of the four major types of
input subsidies has increased significantly
during the period 1980-81 to 1986-87.
Total input subsidies increased from the
level of 64.1 billion rupees in 1980-81 to
127.2 billion rupees in 1986-87. In relative
terms, total input subsidies represent 15% of
NDP in agriculture in 1980-81 and this
proportion has risen to 17% by 1986-87.
Thus, the rapid pace of modernization of
Indian agriculture has been sustained to a
considerable extent by a significant subsidization of agricultural inputs.
4.
The early stages of modernization
requires significant stepping up of
investment in agriculture. Gross
capital formation as a proportion of
net domestic product in agriculture
has to rise considerably as this
appears to be the precondition of
modernization.
5.
Modernization of agriculture leads
to resilience of agriculture and
makes it less sensitive to weather
conditions and fluctuations in
rainfall.
6.
Since the success of modernization
depends on the farmers switching
over to modern inputs, the govern
ment is required to intervene
primarily in the form of ensuring
remunerative prices of crops and
providing direct incentives for the
use of modern inputs.
Lessons from the Indian
Experience
Based on the above analysis of the Indian experience of modernizing agriculture, the
following conclusions may be drawn:
1.
Modernization of agriculture leads
to an increase in the total factor
productivity in agriculture.
2.
Higher the pace of modernization,
higher is the growth of TFP in ag
riculture.
3.
Acceleration in TFP more than
compensates for the deceleration in
factor inputs, especially land, and
thereby leads to acceleration of the
output of agriculture. Whether the
emergence of a major thrust for
modernization of Indian agriculture
at a time when the expansion of net
area sown almost petered off, was a
mere coincidence or a likely se
quence in the process of agricultural
development that could recur in
other LDCs is a question requiring
indepth research.
At this stage, it is important to recognize •
that modernization of agriculture has significant implications on the balance of
payments (BOP) of the country. In as much
as LDCs are unlikely to be self-sufficient in
the production of fertilizers, pesticides and
farm machinery, modernization of agriculture would necessarily have a high degree
of import intensity which would put severe
strain on the county's BOP. In the Indian
case, however, adverse impact of modernization of agriculture on BOP has been
mitigated largely on account of the highly
diversified industrial base thanks to the 15
years of planned development that preceded the advent of the Green Revolution in
the country. In fact, Indian industry could (a)
meet the growing demand of modern agricultural inputs to a large extent, especially after
the mid-Seventies. Thus, the precondition for
successful modernization of agriculture imposed
by the BOP considerations is that the country
should have either (i) a reasonably sound
industrial base or (ii) readily available export
market for its agricultural products. India meets
the first of these conditions but not so much the
second. But an LDC not having an industrial
base but assured of export markets for its agricultural products can still overcome the BOP (b)
problem in modernizing agriculture.
Another significant impact of modernization of agriculture on BOP is through the
reduction of the import bill over time. The
Indian modernization of agriculture has
been of an import substituting nature, especially during the frequently occurring drought
years. The average import bill on food
grains during the drought years in India has
declined significantly since the mid-Sixties.
This is the major advantage of modernization of agriculture. It brings food security
and food self-sufficiency in the country, so
that the scarce foreign exchange can be
spared for more productive developmental
needs of the economy.
The Indian experiment of modernizing agriculture had the primary objective of step- (c)
ping up the growth of agricultural production
and of making the country self-reliant in food
grains. To a large extent this objective is
achieved. However, some of the other effects
of the Green Revolution that should be
considered are:
Employment effect of the new
technology is positive on the
balance (Chadha & Khurana, 1989;
Basant, 1987). Studies in this field
have shown that the structure of
employment tends to shift in favour
of hired labour and against the
family labour. Similarly, the
seasonal fluctuation in the farm
employment also tends to decline
with modernization of agriculture.
(Basant, 1987).
The spread of new farm technology
is always uneven in terms of
regions and crops leading to imbalances in the initial period
(Mruthyunjaya and Kumar, (1989).
The Indian experience shows that
the initial breakthrough in the
technology is limited to one or two
crops and one or two regions. The
causes for this could be in terms of
(i) location of infrastructure, (ii)
farmers' attitudes f depending inter
alia on socio-cultural environment
and (iii) weather-related factors. If
these problems are tackled
carefully and systematically in the
short run, the goals of balance
could then be achieved in the long
run.
The Green Revolution in India has
a serious effect on the inequalities
in the distribution of income, land
and assets in the rural area. Whereas Dhanagare (1987) and SatyaPaul
(1989) argue that the new agricultural technology has adverse effects
-
on land distribution and income
disparity among farm families,
Chadha and Khurana (1989) find
empirical support to "dispel the
belief that gains of rapid economic
growth in general and agricultural
transformation in particular, wherever achieved, have not percolated to the poor." They found that
fast and sustained growth led to
percolation of the gains to the poor
in the case of Punjab. However, in
the case of slow and unsteady
growth, as in Bihar, such gains bypassed the poor. Thus, the
inequality and poverty alleviating
effects of the agricultural modernization seem to be related to the
intensity of the process.
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Patnaik, Prabhat (1987): "Recent
Growth Experience of the Indian
Economy: Some Comments,"
Economic and Political Weekly,
Annual Number, Vol.22, Nos. 1921, May.
Rath, Nilakantha (1989): "Agri
cultural Growth and Investment
in India," Journal of Indian
CAD1U Jt, UTTSTWBSS
10
March 1992
TABLE 1
CLASSIFICATION OF THE NUMBER OF LDCs ACCORDING
TO THEIR GHOWIH PATTERN
Over the Periods 1965-80 to 1980-87, Countries Experiencing
Growth/
Decrease in Gy
Increase in Gy
Constant Gy
Agri. Ind. Serv. Agri. Ind. Serv. Agri. Ind. Serv.
Decrease
24
30
Increase
10
5
2
Constant
1
-
-
Total
35
33
35
2
2
5
5
35
7
11
7
1
-
-
-
77
-
11
1
Source: Appendix I •
TABLE 2
SONE INDICATORS OF THE EXTENT OF
MODERNISATION IN INDIAN AGRICULTURE
Indicator
Proportion of Area
Irrigated
Proportion of Area
Under HYV
Intensity of
Fertilizer
Consumption
Cropping Intensity
Land Productivity
Labour
Productivity
Capital-Labour
Ratio
Capital-Land Ratio
Units
Per cent
1950-51
17.1
Per cent
1966-67
1980-81
1988-89
17.1
28.7
33.8
1.2
24.9
35.4
kg. per ha.
1.14
6.99
31.89
62.37
Per cent
111
115
123
125
Rs. pr ha. at 1980-81 prices 1994
3072
3927
2265
Rs. per worker at 1980-81
1927
2145
2485
prices
Rs. per worker at 1980-81
2218
3306
3578
prices
Rs. per ha. at 1980-81 prices 2296
4735
5655
Capital-Output Ratio
No. of workers
Labour -Land Ratio
per ha.
1943
2581
3010
1.15
1.33
1.54
1.44
1.03
1.17
1.43
1.58
Source : Appendix 2 .
March 1992
31
FARM & BUSINESS
TABLE 3
GROWTH OF FACTOR INPUTS AND TOTAL FACTOR
PRODUCTIVITY IN INDIAN AGRICULTURE
(Average Annual Growth Rates in Per cent)
Factor
1950-51 1966-67
Labour
1966-67 1980-81
1980-81 1988-89
1966-67 1988-89
Land
Total Factor Input
1.67
2.64
0.91
1.55
1.64
3.45
0.15
1.47
1.39
2.40
0.15
1.20
1.55
3.07
0.15
1.37
Total Factor
Productivity
NDP in Agriculture
0.17
1.72
0.88
2.36
2.05
3.27
1.30
2.69
Capital
Source: Appendix 2.
TABLE 4 SOURCES OF GROWTH OF INDIAN
AGRICULTURE
Relative Contribution (Per cent)
Source of
Growth
Labour
Capital
Land
Total Factor Input
Total Factor
Productivity
Growth Rate of NDP
Source: Appendix 2.
1950-51 1966-67
1960-67 1980-81
1980-81 1988-89
1966-67 1988-89
54.7
18.0
17.4
90.1
41.5
19.1
25.4
10.4
33.8
15.6
2.1
1.2
1.9
62.7
37.0
51.3
9.9
37.3
100.0
63.0
100.0
48.7
100.0
100.0
TABLE 5 MQOMJM SUPPORT/PROCUREMENT
PRICES OF AGRICULTURAL COtODITIES
(Rupees per Quintal)
Cccirrodity
Wheat
Paddy
Pulses
Groundnut
Cotton
1980-81
1988-89
117
105
200
206
304
173
160
360
430
500
Percentage Increase
48
52
60
SO
64
Soruce: Economic Survey 1985-86 and 1989-90, Government of India.
TABLE 6 TRENDS OF INPUT SUBSIDIES IN INDIAN
AGRICULTURE
(Rs. Million at Current Prices)
1980-81
1988-89 Percentage Increase
Fertilizer Subsidy
Irrigation Subsidy
Electricity Subsidy
Credit Subsidy
5,050
49,537
3,530
5,955
11,873
84,386
14,570
16,414
135.1
70.3
312.7
175.6
Total Input Subsidies
64,072
127,243
98.6
Source: Ashok Gulati (1989a).
APPENDIX 1
ANNUAL COMPOUND GROWTH RATES OF INCOME AND AGRICULTURAL
INPUTS IN SELECTED DEVELOPING COUNTRIES
(Per cent)
Country
Growth of
Total GDP
65-80
80-87
2
3
Ethiopia
2.7
0.9
Bangladesh
Mali
Uganda
Burundi
Tanzania
Togo
Niger
Cent. African Rep.
India
China
Kenya
Zambia
Sierra Leone
Sudan
Pakistan
Ghana
Sri Lanka
Senegal
Liberia
Phillippines
Morocco
Bolivia
Nigeria
Dominican Rep.
Honduras
Egypt
Nicarigua
Thailand
El Sanvador
Botswana
Jamaica
Cameroon
Congo
Paraguay
Peru
Turkey
Tunisia
Ecuador
Colombia
Chile
Costa Rica
Syria
2.4
3.9
0.8
3.5
3.7
4.5
0.3
2.6
1
3.7
6.4
6.4
1.9
2.6
3.8
5.1
1.4
4.0
2.1
3.3
5.9
5.4
4.5
8.0
7.3
5.0
6.8
2.6
7.2
4.3
14.2
1.3
5.1
6.4
6.9
3.9
6.3
6.6
8.7
5.6
1.9
6.2
8.7
Growth of
Growth of
GDP in Indus . GDP in
Serv
65-80 80-87 65-80 80-87 65-80 80-87
Growth of
GDP in Agri.
4
5
6
7
8
9
1.2
-2.1
3.5
3.8
5.2
3.5
3.8
1.5
3.4
2.8
0.4 1.2
2.6
3.3
1.7
1.6
-0.5 1.9
-1.9 -3.4
2.0
2.1
4.8 2.8
10.4 3.0
3.8
4.9
-0.1 2.2
0.7
2.3
-0.1 2.9
6.6 3.3
1.4 1.6
4.6
2.7
3.3
1.4
-1.3 5.5
-0.5 4.6
3.2 2.2
-2.1 3.8
-3.2 1.7
1.6 4.6
1.3 2.0
6.3 2.7
-0.3 3.3
5.6 4.6
-0.4 3.6
13
9.7
0.4 0.5
7.0 4.2
5.5 3.1
1.3 4.9
1.2 1.0
5.2 3.2
3.6 5.5
1.5 3.4
2.9 4.3
1.0 1.6
1.8 4.2
0.3 4.8
2.4
0.3
-0.5
1.7
3.8
0.8
2.8
2.4
0.8
7.4
3.4
3.2
3.8
1.8
-4.1
7.8
4.2
6.8
11.4
5.3
4.0
10.0
9.8
2.1
-1.0
3.1
6.4
1.4
4.7
4.8
2.2
3.7
3.4
7.6
1.1
2.7
6.7
5.4
3.4
2.0
4.6
7.0
6.4
1.5
5.8
4.9
5.9
1.1
4.6
5.2
5.9
3.0
3.5
0.8
-0.7
1.6
0.8
3.4
0
3.0
4.2
1.2
1.8
2.7
2.5
1.4
1.0
1.7
2.7
-0.2
3.7
-1.6
-7.8
1.4
2.4
1.5
2.0
3.0
3.3
-4.2
3.6
2.0
3.6
1.7
-1.1
9.0
6.9
3.7
13.4
10.9
6.8
6.9
4.2
9.5
5.3
24.0
-0.1
7.8
10.3
9.1
4.4
7.2
7.4
13.7
5.5
0.8
8.7
11.8
9.8
1.4
4.9
-2.4
-1.6
-4.3
2.2
7.2
13.2
3.0
-0.7
-2.3
2.1
9.1
0.1
4.2
4.3
-6.0
-2.8
5.5
-6.6
-5.1
1.0
1.2
5.5
0.4
5.9
0
19.2
-0.4
11.0
10.9
-0.3
0.5
6.7
2.7
1.4
5.2
1.5
2.0
1.5
1.3
2.4
5.2
9.4
5.6
8.8
6.7
6.2
» 9.4
1.4
7.6
4.3
11.5
2.7
4.8
4.7
7.5
4.3
7.6
6.5
7.6
6.4
2.7
6.0
9.0
-8.0
1.6
6.1
7.6
4.4
-0.6
1.3
-1.3
7.1
4.2
5.7
2.4
-0.8
0
8.1
-1.1
-4.0
1.3
1.1
8.1
-0.9
6.4
0.2
9.5
0.8
6.9
-1.9
1.9
1.4
5.0
4.1
0.9
2.0
0.3
1.7
0.3
APPENDIX 1 (cont'd.)
ANNUAL COfOUND GROWTH RATES OF DJCCfE AND AGRICULTURAL
INPUTS IN SELECTED DEVELCPING COUNTRIES
(Per cent)
Growth of Lab. Growth of Ha. (irowtn o No .
of Fert
f
(1965-80)
Prdty
Under Irrig. of Tractors Consn ./H .
Country
1
Total
Agri.
10
11
66-80
12
76-86 69-76
13
14
Ethiopia
0.6
-0.41
1.4
11.4
Bangladesh
0.5
2.2
0.37
1.41
-1.41
2.17
-0.74
-0.35
-4.91
2.24
1.38
1.22
1.71
0.04
8.6
6.1
0
2.3
4.0
8.0
8.4
13.8
8.9
5.1
29.8 12.9
2.7
8.9
8.8
Mali
Uganda
Burundi
Tanzania
Togo
Niger
Cent. African
India
China
Kenya
Zambia
Sierra Leone
Sudan
Pakistan
Ghana
Sri Lanka
Senegal
Liberia
Phillippines
Morocco
Bolivia
Nigeria
Dominican Rep.
Honduras
Egypt
Nicarigua
Thailand
El Sanvador
Botswana
Jamaica
Cameroon
Congo
Paraguay
Peru
Turkey
Tunisia
Ecuador
Colombia
Chile
Costa Rica
Syria
-2.2
2.3
0.9
1.9
-1.5
1.4
2
4
2.8
-0.8
1.7
1.4
2.5
-0.5
1.8
-1
0.7
3.4
2.5
2.5
5.0
4.5
2.2
4.6
-0.3
4.4
1.0
11.8
-0.7
3.4
4.4
3.7
1.0
4.6
3.8
6.0
3.0
-0.3
2.4
5.4
2.3
1.48
1.29
0.28
0.87
-1.53
3.35
2.84
1.22
2.88
-0.91
3.49
-0.06
1.71
1.71
2.78
2.46
8.93
-0.30
3.89
1.52
2.49
-0.38
3.23
4.98
3.03
3.60
2.50
3.24
4.79
0
0
0
2.6
0.8
9.5
0
7.2
0
1.2
5.2
2.9
3.5
17.5
0
2.6
0.2
5.8
5.9
11.2
25.8
12.8
15.8
7.6
-0.5 0
25.9 6.5
22.3 2.8
5.9 10.5
1.7 10.1
-8.8 3.5
1.4
3.3
0
0.1
3.8
4.5
7.2
4.4
5.3
4.8
10.3
1.4
1.2
1.9
0.2
49.7
10.0
10.8
21.2
34.9
4.1
14.5
3.3
5.1
-6.7
2.9
4.8
14.9
3.2
0.6
2.9
5.0
1.0
1.7
1.5
0
0.7
2.9
4.0
0.8
-1.1
2.3
9.7
3.8
1.7
4.8
16.6
23.3
13.0
3.2
3.0
6.7
7.2
0.6
10.6
25.9
1.7
0.6
0.8
7.2
0.6
5.1
12.7
1.2
4.2
2.9
16.7
6.0
12.0
-0.2
15.5
1.3
1.9
1.9
1.8
11.3
Sources: 1. FAO Production Yearbook, 1977 & 1978
2. Statistical Yearbook, 1979-80
3 . World Development Rep art
, 1988 &
7686
70-80
80-86
16
17
0 .
5
3 .
3 .
8.5
2 .
1 .
1 .
9 .
3 .
1 .
1 .
3 .
0 .
1 .
7 .
1 .
1 .
5 .
2 .
2 .
6 .
4 .
1 .
3 .
- .
1 .
7 .
6 .
1 .
1 .
1 .
1 .
1 .
0 .
1 .
3 .
8 .
- .
2 .
3 .
2 .
0 .
9 .
9
25. 9
8. 7
12. 5
7. 5
-22. 6
4. 8
8. 7
25. 9
23. 1
-7. 6
10. 5
14. 9
1. 6
8. 3
-2. 6
7. 7
11. 4
16. 9
4. 5
6. i
5. 3
4. 6
0. 4
2. 1
34. 2
1. 7
-1. 4
6. 1
6. 9
7. 9
-1. 6
-3. 3
-2. 9
6. 2
-23. 2
-5. 5
0. 9
9. 5
5. 1
8. 5
5. 6
-4. C
3. 3
12. 6
6. 4
15
18
14
19
1.
17
-
5
2
2
8
3
2
- 5
10 8
2. 0
12 0
- 0
14 0
0.5
9. 7
- 5
4. 7
1. 8
- 9
3. 9
18 9
3. 8
8. 7
- 3
8. 0
5. 4
6. 9
6. 5
0. 3
- 9
;
<
-6
6.
39
9.
6.
:'.
3
5
6
0
0
6. 1
0.
2
1.1. 3
I. .
12 j
.
APPENDIX 2
BASIC STATISTICS RELATING TO INDIAN AGRICULTURE
Variable
Units
NDP (All Sectors)
NDP in Agriculture
(3 -year average)
Capital Stock in
Agriculture
Working Force in
Agriculture
NDP in Agriculture
Capital Stock in
Agriculture
Value of Labour
in Ag r iu c l tu ra l
Income
Share of Capital
in Agricultural
Income
Share of Land in
Agricultural
Income
Net Area Sown
Gross Cropped
Area
Gross Irrigated
Area
Area Under HYV
Fertilizer
Consumption
Stock of Tractors
Sources:
1.
2
3.
4.
5.
6.
7.
S.
Rs.b. at 198081 prices
Rs.b. at 1980-
81 prices
Rs.b. at 198081 prices
Million
1950-51
1966-67
1980-81
1988-89
406.81
668.53
1101.39
1688.70
236.73
310.98
431.03
557.58
272.49
413.24
664.33
802.94
122.84
160.09
200.96
224.38
49.05
132.24
664.33
1730.90
159.92
337.76
1639.94
55.2
55.6
57.4
58.7
Per cent
10.5
12.5
12.3
15.4
Per cent
34.3
31.9
30.3
25.9
Million ha.
Million ha.
118.7
131.9
137.3
157.4
140.3
173.1
142.0
177.0
Million ha.
22.6
26.9
49.6
59.8
0.15
1.9
1.10
43.1
5.52
62.2
11.04
54.0
391.0
persons
Rs.b. at
current prices
Rs.b. at
current prices
Per cent
Million ha.
Million tons
Thousands
2927.62
1205.0
Economic Survey (various issues from 1970-71 to 1989-90):
Government of India.
National Accounts Statistics (Jan. 1987, March 1989 & June 1989)Central Statistical Organization, Government of India.
All India Debt and Investment Survey, 1971-72 and 1981-82, Reserve
Bank of India.
Census of India (1961, 1971, 1981), Government of India.
National Sample Survey (27th Round, 32nd Round £ 38lh Round):
Ministry of Planning, Government of India.
Indian Agriculture in Biref (various editions), Directorate of Economics
and Statistics, Ministry of Agriculture, Government of India.
Dholakia, Bakul H. (1974): The Sources of Economic Growth in India,
Good Companions, Baroda.
Jugdishkumar et. al. (Nov. 21 , 1987) "Estimates of Fixed Capital Stock
and Consumption of Fixed Capital in India," The Economic and
Political Weekly, Vol. 22, No. 47.